EC accuses Vodafone, O2 of overcharging

The European Commission has accused Vodafone and O2 of overcharging overseas operators for roaming services.

Vodafone and O2, two of the largest UK-based mobile network operators (MNOs), have been sent "statements of objections" by the European Commission in relation to the wholesale rates they have charged other MNOs for international roaming services.

MNOs from outside the UK need to apply to Vodafone and O2 to use their roaming services in order to enable their subscribers to make and receive mobile calls while they are in the UK. In a statement, the Commission said that the high wholesale prices being charged by Vodafone and O2 to other MNOs directly relates to the high retail roaming prices that consumers have to pay. This overcharging has created huge discrepancies between domestic call prices and the prices of calls made while abroad.

"Europeans are travelling more and more each year and mobile subscribers are using their phones abroad as frequently as they do in their own home country," commented Mario Monti, competition commissioner, the European Commission. "But the high level of the international roaming prices has made this very expensive. This high level also contrasts sharply with the much lower tariffs applied for domestic calls. I hope that our action today makes a contribution to rectifying this state of affairs."

The Commission found that Vodafone and O2 have used their dominant positions in the UK to their advantage. It notes that Vodafone has been involved in the practice of overcharging for roaming services at wholesale level since 1997 through to September 2003 and that O2 was involved in the same practice since 1998 through to September 2003. The EC has deemed the overcharging to be "unfair and excessive."

The statement of objections issued by the European Commission establishes its position on Vodafone's and O2's violation of the competition rules. Both Vodafone and O2 now have an opportunity to respond to the Commission's preliminary findings in writing and in an oral hearing. O2 has denied that it has acted anti-competitively and has said that it will review the Commission's decision and respond accordingly. Vodafone has said it is too early for it to comment on the decision.

n Ireland this month, telecoms regulator ComReg ruled that O2 and Vodafone had overcharged customers for overseas calls since February 2004. In June, O2 admitted that 65,000 customers were overcharged for overseas calls, but the subsequent investigation ordered by ComReg revealed that another71,000 customers also had been charged more than they owed. The mistake is set to cost O2 almost €722,000 in repayments to customers. Vodafone must repay €147,739 to customers.